Rocket Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which...
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Accounting
Rocket Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below.
Activity
Cost
Cost Driver
Material handling
$ 230,000
Number of parts
Material insertion
2,480,000
Number of parts
Automated machinery
845,000
Machine hours
Finishing
175,000
Direct labor hours
Packaging
175,000
Orders shipped
Total
$ 3,905,000
The following information pertains to the three product lines for next year:
Economy
Standard
Deluxe
Units to be produced
10,500
5,500
2,500
Orders to be shipped
1,050
550
250
Number of parts per unit
10
15
25
Machine hours per unit
1
3
5
Labor hours per unit
2
2
2
Assume that Rocket is using a volume-based costing system, and the preceding overhead costs are applied to all products on the basis of direct labor hours. The overhead cost that would be assigned to the Deluxe product line is closest to:
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